So will the great bond ogre leap up and bite stockmarket investors and their fortunes around the world again this week?
Markets continued to rebound overnight in Asia, Europe and the US, meaning we will have a mild day here, especially withgold and copper recovering some of Friday's nasty losses as well.
Wall Street had a late fade which will worry some traders.
But I reckon you can bet on a bit of instability and market volatility for a while because trading opportunities abound to tempt the agile hedge funds and other speculators.
But we should add a few provisos for people to remember as they start worrying.
It was only three months ago that we were worrying about what the impact of a slowdown would do to the value of stocks: then sentiment turned and we are now worrying about the opposite.
If you'd sold back in the March correction you'd have missed the very sharp rally since then, conversely if you'd hung on, you'd be wealthier. Or at least, feeling a lot wiser.
Keep that in mind as we go through a series of knee-trembling corrections, while also remembering that this will be happening in thin liquidity because it is the northern summer and traders go away and markets get far twitchier than in the northern autumn and winter.
That old market adage about 'Buying in May and Going Away' meant just that: ignoring the usual volatility associated with thinner markets in the northern summer.
Unlike a year ago when commodities were running hard, it's a much different outlook: metals, gold and even many of the soft commodities are a bit weaker or more wary of the outlook.
The super boom commodity theory of 2006 has been well and truly punctured. Equally the 'world is going to be rooned' by rising interest rates is another argument that ought to be forgotten.
Rising interest rates are a concern in that they dry up liquidity in lending markets faster than anything else.
But when you have Japanese rates still low and a fairly well developed method of recycling that lower cost money into higher yielding markets, then something much larger will have to happen to mop up liquidity quickly.
The US is the influential market when it comes to interest rates. And this week will see a few reminders of this influence.
The Standard And Poors 500, the wider of the major US market indices, fell 1.9 per cent last week, cutting 2007's gains to 6.3 per cent.
But with those worries about interest rates the weakness was concentrated in the power utilities quoted in the S&P 500.
Like property trust and infrastructure funds in Australia, utilities can be looked on as a proxy for interest rates because of their yield based returns (in usual circumstances) and their high levels of gearing which consume much of the huge cash flows.
Utilities in the S&P 500 last week fell more than five per cent, the biggest fall in four and a half years.
The drop in shares, especially the utilities (some fell by seven per cent or more), mirrored bond losses, which drove the yield on the benchmark 10-year Treasury note up 15 basis points to 5.10 per cent on Friday. That peaked at 5.25 percent on Friday, the highest since May 2002.
The market now reckons a rate rise is very possible from the Fed, but as I said earlier, from March to last week punters and soothsayers were speculating on a rate cut from the Fed.
This week will see more speculation about rising inflation levels and their impact on interest rates in the US.
The US Labor Department producesconsumer price figures on Thursday, whileretail sales figures, also for May, are due to be released as well. Analysts say the sharp rise in petrol prices in May will drive prices and retail sales higher.
As well, figures for the US current account, industrial production and consumer sentiment and the Fed's Beige Book of anecdotal evidence on the economy, are also due for release.
All have the potential, in the current atmosphere, to trigger more volatility.
But we should remember that last year there were similar falls (it's why interest rates peaked last June at that 5.25 per cent level).
From then on the fear was the impact of slowing economic growth and rising inflation might produce 'stagflation', which also didn't happen. Inflation subsided but growth eased because the spike in rates whacked the US housing boom, especially in subprime mortgages, knocking things lower again.
Perhaps the trick will be trying to spot a possible 'sub prime mortgage' situation in 2007: such as highly leveraged bonds and highly leveraged takeovers.
US bond yields in recent years have been kept lower than might have been expected by flows from overseas buyers (such as the central banks of Japan and China).
As the Amp's Dr Shane Oliver has pointed out: "The obvious weak points are (US) housing and credit markets.
"(US) residential real estate remains weak and could be hit further by the half point rise in 15-year mortgage rates during the past six months.
"Meanwhile, credit investors who have taken risky positions based on low yields in the Treasury market could get a shock.
"The rise in bond yields has the potential to cause further share market weakness in the short term. However, it is likely to be just another correction in the context of the ongoing bull market in shares."
